Trump’s inauguration and the effect on equities
By International Adviser, 20 Jan 17
As Donald Trump is sworn in as the 45th president of the US, International Adviser has compiled the latest views on how his inauguration may effect your investments.
Richard Buxton, head of UK equities, Old Mutual Global Investors:
What will occupy front and centre stage in the first hundred days of Trump’s presidency is his focus on tax reforms. Slashing the corporate income tax rate should unleash significant cash piles currently stored overseas. US companies will, however, see both winners and losers depending on the nature of the reforms designed to favour exports over imports.
For Joe Public of Main Street the focus will be on how quickly any policies translate into more secure job prospects and some wage growth, fulfilling one of Trump’s key election pledges.
Two other key – and interlinked – issues will dominate markets thinking during the first hundred days. What will the new administration do in terms of protectionist policies and what role will the dollar play in this? Trump’s recent desire to talk the dollar down eased short-term fears that a stronger dollar could hurt corporate America.
Will Trump deliberately attempt to weaken the US currency to put pressure on countries he deems to have artificially weak currencies and big trade surpluses? Or will rising US interest rates support the consensus view that the dollar will remain strong?
Could a lower dollar actually force the rest of the world to follow America’s example and raise interest rates? And, if so, what effect would that have on global stock markets? Could the unprecedented eight-year run in global equities be coming to an end… finally?
Tags: Natixis | Old Mutual
